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Is the Bitcoin price correction over? Here’s the support level to watch: TradingView news
The price of Bitcoin has seen significant downward pressure over the past week, dragging a large portion of the overall cryptocurrency market with it. The leading cryptocurrency plunged to as low as $59,500 at one point in the week, its lowest in nearly two months.
While investors hope that the worst is over, it is difficult to determine whether BTC is ready to resume its bull run. In any case, a well-known cryptocurrency intelligence firm has identified a critical price level for the future trajectory of Bitcoin’s price.
$56,000 The Ultimate Support Level for Bitcoin: CryptoQuant
In a recent report, blockchain analytics platform CryptoQuant put forward an interesting prognosis for the price of Bitcoin in the coming days. According to the company, the $56,000 price level is an important level for the future performance of the leading cryptocurrency.
The relevant indicator here is Metcalfe’s price valuation bands, which have identified resistance levels and highs in the previous cycle. However, as shown in the chart below, these bands (the red line) acted as a critical support area in May.
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For context, Metcalfe’s Law states that the value of a network is proportional to the square of the number of its users. In practice, this law suggests that the value of cryptocurrency (Bitcoin) is intrinsically tied to the size and activity of its network.
The Metcalfe price valuation bands are derived from this principle, providing a valuation framework associated with the network effect. These bands create a range of price levels that evaluate where Bitcoin should theoretically trade based on network fundamentals.
Historically, these bands have acted as both reliable resistance and support levels over several market cycles. Over the past few months, the $56,000 level has been a turning point for the indicator, providing strong support for Bitcoin’s price in May.
According to CryptoQuant’s report, the price level could prove vital if the leading cryptocurrency faces further downward pressure. However, if the price of Bitcoin falls below this level, the market leader could experience a major correction.
Bitcoin Price at a Glance
At the time of writing, Bitcoin’s price is back to around $60,700, reflecting a 2% decline over the past 24 hours. The coin’s performance in the weekly timeframe is more in the red.
According to data from CoinGecko, BTC has fallen by more than 6% in the past week. However, the cryptocurrency ranks as the largest asset in the sector, with a market capitalization of over $1.18 trillion.